Through the blockchain-based cryptocurrency, the bank can transfer money around the world more quickly than it can through fiat, possibly paving the way for it to put more of its processes on blockchains — the cryptocurrency could transfer as quickly as blockchain-based smart contracts are closed.
"So anything that currently exists in the world, as that moves onto the blockchain, this would be the payment leg for that transaction," Umar Farooq, JPMorgan's head of blockchain projects, told CNBC. "The applications are frankly quite endless; anything where you have a distributed ledger which involves corporations or institutions can use this."
JPMorgan's trials with JPM Coin will be one of the first and most significant real-world tests of cryptocurrency in the industry.
Famously, the bank's CEO Jamie Dimon has disparaged bitcoin, the original cryptocurrency, as a "fraud," saying he would fire any employee trading it for being "stupid" in September 2017 (when BTC prices were around $5,000).
Of course, JPM Coin doesn't necessarily share many qualities with bitcoin.
"Each JPM Coin is redeemable for a single U.S. dollar, so its value shouldn't fluctuate, similar in concept to so-called stablecoins," CNBC reported. "Clients will be issued the coins after depositing dollars at the bank; after using the tokens for a payment or security purchase on the blockchain, the bank destroys the coins and gives clients back a commensurate number of dollars."
JPM Coin will initially run on top of the Quorum blockchain platform, a private version of Ethereum.
"The JPM Coin will be issued on Quorum Blockchain and subsequently extended to other platforms," per a FAQ posted online. "JPM Coin will be operable on all standard Blockchain networks."
Farooq said that JPMorgan will be utilizing its new cryptocurrency for international payments at large corporations, securities transactions and as a replacement for the dollars held through its treasury services.